11. RADA EXEMPTS CONTRIBUTIONS TO STATUTORY CAPITAL OF ENTERPRISES BEING CREATED FROM VAT

Ukrainian News Agency, Kyiv, Ukraine,
Thu, December 22, 2005

KYIV - The Verkhovna Rada has exempted operations involving transfer capital assets as contributions to the statutory capital of enterprises from value-added tax.

The relevant draft law, which is entitled "On Introducing Amendments in the Law of Ukraine on Value-Added Tax" and registered as No. 7494," was approved as a whole by 290 votes. Only 226 votes were required for its approval.

The parliament has exempted from value-added tax operations involving transfer capital assets as contributions to the statutory capital of corporate entities if the transfer is conducted in exchange for corporate rights in such entities, including operations involving importation of capital assets onto the territory of Ukraine (excluding goods subject to excise duty) and operations involving their export.

Thus, the parliament intends to return the practice of taxation that existed before March this year, when amendments were made to the state budget for 2005. Parliamentary Deputy Serhii Kiroiants prepared the draft law.

FOOTNOTE: This action by the Parliament is very good news for the international investment community. Ukraine made a move in the wrong direction when the law was changed in March of 2005. Many very good investments were lost as a result of this serious mistake by the Yulia Tymochenko government. EDITOR